According to the U.S. Census Bureau, the average life expectancy age in 2020 will be 79.5 years of age. Today, only 20 percent of workers feel they are saving enough for retirement. According to the U.S. Census Bureau, the average retirement age in America is 62, and the average length of retirement is 18 years. How much money is enough to sustain one during these retirement years? It’s difficult to put your finger on an exact amount because expectations of what is considered an acceptable lifestyle and the cost of living varies throughout the country. While researching the answer to this question, 90% of the time one is directed to advertising websites disguised as retirement calculators or calendars, however, according to InCharge Institute of America, Inc., the rule of thumb of how much you'll need to retire is 70-80 percent of your pre-retirement income on an annual basis. That means if you're making $50,000 when you retire, you'll need an income of at least $35,000-$40,000 every year after you retire.
That figure doesn’t seem so bad until you consider the fact that last year’s market meltdown, eroded most the baby boomers’ nest eggs and then there’s the concern if a baby boomer will “out live” social security. According to the statisticians, that day will come sooner than later. Due to the estimated 5.7 million jobs that have been lost since the end of 2007, payroll taxes used to fund Social Security have been drastically reduced. As a result, according to an article in the New York Times, the Social Security trust fund will be exhausted in 2037, four years earlier than predicted.
Regardless if you are baby boomer or not, unless your independently wealthy or are planning on winning the lottery, one obviously needs to save and invest as much as money as possible to prepare for retirement. Pieces of advice are to:
· Get a handle on your expenses. Identify and eliminate unnecessary extras.
· Pay off credit card or other high-interest debt. Pay your credit card bills in full each month.
· Get help if you have poor credit. Consider consolidating some loans or credit cards and negotiating repayment terms with creditors.
· Create a budget that includes money to save and invest.
· Practice good habits such as contributing as much as possible to an employer sponsored retirement plan where you work or have money transferred directly each month from your checking account to one or more savings and investment accounts.
DISCLAIMER: The information contained throughout Baby Boomers’ Legal Stew Website is not a substitute for professional advice and does not constitute professional advice nor is conveyed or intended to convey professional advice.
That figure doesn’t seem so bad until you consider the fact that last year’s market meltdown, eroded most the baby boomers’ nest eggs and then there’s the concern if a baby boomer will “out live” social security. According to the statisticians, that day will come sooner than later. Due to the estimated 5.7 million jobs that have been lost since the end of 2007, payroll taxes used to fund Social Security have been drastically reduced. As a result, according to an article in the New York Times, the Social Security trust fund will be exhausted in 2037, four years earlier than predicted.
Regardless if you are baby boomer or not, unless your independently wealthy or are planning on winning the lottery, one obviously needs to save and invest as much as money as possible to prepare for retirement. Pieces of advice are to:· Get a handle on your expenses. Identify and eliminate unnecessary extras.
· Pay off credit card or other high-interest debt. Pay your credit card bills in full each month.
· Get help if you have poor credit. Consider consolidating some loans or credit cards and negotiating repayment terms with creditors.
· Create a budget that includes money to save and invest.
· Practice good habits such as contributing as much as possible to an employer sponsored retirement plan where you work or have money transferred directly each month from your checking account to one or more savings and investment accounts.
DISCLAIMER: The information contained throughout Baby Boomers’ Legal Stew Website is not a substitute for professional advice and does not constitute professional advice nor is conveyed or intended to convey professional advice.
I am in so much trouble. The baby boomer is going to bomb when its retirement. I can so relate to not having a retirment account and the dangers of not saving. Your article was so on point.
ReplyDeleteWhen Social Security was introduced in 1933, the average life expectancy was not what it is today. Most people died before ever receiving benefits- it was meant for the poorest of the poor, not as a retirement account for the average person.
ReplyDeleteThat being said, Americans need to stop thinking of SS as a surety and start saving and investing for their future. I read an article that stated that if one invested $2,000 every year from 18 until 25 and left the money in an investmant vehicle that paid an average of 7% , the person could retire with a million dollars. Interesting huh? I am encouraging my children to save as much as they can.
Christine Walker
I agree with Christine. The average life expectancy back then was no where near what it is today. It is hard to be believe that many people today have no nest egg nor a form of a cushion.
ReplyDeleteIt has been reported that the Delphi workers who have been receiving their retirement for some time (meaning the older crowd) in December of the coming year are to possibly lose their health insurance and their retirement so that they can cust back their losses. Time will tell!! Great information to know for my future and for my kids.
I'm a Baby Boomer and I'm scared. It's hard to save when expenses exceed income, gas and health care are on the rise and there is no safe place to save any extra money you might acquire. I just hope I can get back a little of what I put into Social Security all these years.
ReplyDeleteI completely agree with this article. I live and die by my budget and it makes my life so much easier. I don't depend on anyone other than myself for what I am going to retire on. I do fear for older generations though. Many lost much of their retirement. It is a bit scary.
ReplyDeleteMy father was a financial planner and beginning with my first babysitting job, taught me the 10-10-80 rule. The first 10 percent goes to God (to the church via my tithe), the second 10 percent goes into savings (retirement now) and I live on 80 percent. This rule has served me well, although I don't always follow it strictly. His other favorite saying was, "If you can't pay cash for something, you can't afford it." My husband and I are pretty disciplined about saving for retirement and saving for purchases, although the current recession made me realize it can evaporate pretty quickly. Just remember, it's never too late to start, even if it's just $5 a week.
ReplyDelete